Turns Out Bing's Share Gains May All Be From Toolbar Distribution Deals

We remain very skeptical that Microsoft's Bing will be a long-term success.

Although Bing has some nice features, we don't think they're enough to get people to stop using Google and start using Bing. The current search experience isn't broken, and Google should be able to quickly copy any innovations Bing does roll out, thus allowing it to preserve its market share.

That said, Bing has gained about a point and a half of share since June, prompting some Microsoft fans to ask us when we plan to admit we're wrong.

Our answer: When Bing's share has risen to the low teens on organic share gains.

What does that mean?

It means that we won't view Bing's gains as meaningful or important until Microsoft demonstrates that Bing is growing organically, through people switching search engines, without buying market share through toolbar partnerships and other distribution deals.

Why doesn't growth from distribution deals count?

Because anyone can buy market share.

If we had billions of dollars to blow on distribution deals, the Business Insider could gain a few percentage points of search market share, too. But that wouldn't mean we had a sustainable, profitable search business with a bright future.

According to TMT Analyst, Comscore data suggests that all of Bing's modest share gains thus far have come from toolbar distribution deals, not organic growth. If this is accurate, even the small increase thus far isn't really good news.

It appears that Bing's share gains could be largely due to its OEM distribution relationships with HP, Dell, and Lenovo, rather than users making a conscious decision to shift from Yahoo, Google, and other search engines. Combined, the above three computer manufacturers have more than 50% market share in the U.S. and PC sales have been increasing over the past few months. As PC sales increase, due in part to Windows 7, then Bing's share should also increase. A quick look at Microsoft's share of toolbar searches verifies this: Microsoft's April 09 toolbar search market share was 2.4%, according to comScore, while in October 09, it more than doubled to 5.5%. Overall industry toolbar searches have remained steady as a percent of total searches. At the same time, Microsoft's domestic search share increased from 8.2% in April to 9.9% in October. There you have it.